The IMF has welcomed the agreement by Eurozone finance minister on a new support package for Greece.

After talks that went on until the early hours of the morning in Brussels, IMF Managing Director Christine Lagarde said on February 21 she welcomed the “proposed understandings reached today by the Euro Group to support Greece.”

“The combination of ambitious and broad policy efforts by Greece , and substantial and long-term financial contributions by the official and private sectors, will create the space needed to secure improvements in debt sustainability and competitiveness,” she said in a statement. “These actions, together with a significant strengthening of the financial sector, will pave the way for a gradual resumption of economic growth.”

Depends on timely policy implementation

“The success of this strategy crucially depends on full and timely policy implementation by Greece and long-term support by euro area member states,” Lagarde said. “Recognizing the sacrifice involved for the Greek people, the strategy will also aim to minimize the impact on the poorest and most vulnerable.

“As soon as the prior actions agreed with the Greek authorities are implemented and adequate financial contribution from the private sector is secured, I intend to make a recommendation to our Executive Board regarding IMF financing to support a program.

Strengthening the firewall

“I also welcome today’s discussion on ensuring the adequacy of the European Financial Stability Facility (EFSF) and European Stability Mechanism (ESM), which will help bolster the firewall against financial contagion, catalyze efforts to enhance IMF resources, and help secure global stability for the benefit of all,” she added.

8 Responses

The IMF welcomes the new troika-sponsored program of injecting poison in the virtually dead body of the Greek economy, knowing fully well that the injury is fatal.

On the one hand, the credit rating agencies are doing their part of the downgrading of an entity which is already down due to their successive blows. And on the other hand, the ECB is invalidating the acceptability of Greek souvenir bonds as admissible collateral for loans. On top the culprits — big European banks and financiers — are hoovering over the head of this skeleton. As a matter of fact, all these agencies, bodies and groups, including the IMF, are the cause and effect of the Greek Tragedy.

Right from the beginning i.e 2008, they could have helped Greece to survive by adopting the following debt restructuring process:-
(i) Diluting the terms of loans and other stringent conditions of the agreement; (ii) reducing the exorbitant rate of interest or complete remission there of; (iii) asking the giant German/French/British banking/financing agencies/bond traders/real-estate brokers and insurance agents to refrain from bleeding white the then vibrant economy; (iv) enabling the export earning/tax generating venues and tourism industry by extending practical help to boost its growth of employment opportunities and GDP, and raising consumer confidence.

Nothing of this sort happened due to divergence of all energy toward bailouts and dubious austerity measures and ((v) providing technical assistance in curbing corruption, lawlessness, tax evasions, money laundering and such other evils.

Hence, Greece today is serving as a ‘bare-foot bar-boy’ to say ‘yes’ to everything the big bosses of this IMF-led troika orders under duress — as if beggars and borrowers are not the choosers.

The things are now moving toward a ‘loot-sell’ of its precious assets — buy one, get two free. In fact, one oil company from the EU has crept in to do the needful in the troubled Greek waters. Still more is in the offing. Who cares for the austerity-stricken/poor/innocent Greeks?

You have a point but you forget that one of the aims of the German-led bailout was a warning to others: ignore fiscal discipline at your peril.

This whole affair has been “pour discourager les autres.” Greece is the smallest naughty child in the family — it has therefore been made an example of, so that the other children, and particularly the teenagers such as Italy and Spain, toe the line.

The Germans regard such action as necessary to preserve the eurozone and they justify the harshness of their actions by pointing to the desired goal: a peaceful Europe where fiscal discipline ensures that countries use productivity and enterprise, and not devaluation and poverty, to develop their economies.
It’s all very well slagging off the German-led and IMF-supported initiative to save the Greek economy, but the alternative was to turn Greece into Argentina.

Argentina today remains a corrupt, mismanaged and inefficient economy in which the biggest losers are the ordinary people. Greece deserves better than this.

If the initiative for Greece works, and the reforms are implemented, corruption will be drastically reduced and productivity increased, all measures which while painful in the short run will benefit ordinary Greeks in the long run.

Some of you may want Greece to go bust or join Argentina as a failed state, but the IMF and the EU, to their credit, have higher ambitions for the people of Greece.

My prediction is that Greece will make it; the lagging eurozone states will gradually adhere to the fiscal discipline pact they signed; the euro will strengthen its role as a reliable world currency; and the people of the EU will suffer less corruption and mismanagement than countries outside the EU.

Perhaps Brazil, India, Russia, Indonesia and China might want to try the IMF/EU recipe. It will certainly improve the lives of ordinary people.

[…] of that debt is still in private hands the rest being held by institutional partners like the ECB, IMF, EU partner countries etc So the 50% haircut on the Greek debt about which we hear of late is […]

I wish I could say that I believed the Greek bailout has at last started to solve the Euro crisis, but I am afraid that it is too little and too late. Euro politicians are still behind the curve in finding a solution to the problem and the leading world banks, including the IMF, need to wake them up!!

The Greek people face a generation of austerity and I hope they do the sensible thing — reject the deal and leave the Euro. At the moment they face an impossible situation, they are getting deeper and deeper in debt and at the same time have a shrinking economy. The one size fits all version of the Euro is now plainly unworkable in its current form and the ugly side of capitalism is destroying the home of Democracy.
Michael

Financially, the country is clinically dead long ago. With every new injection of capital and the conditions attached to it Greece has become weaker. With every injection of capital, the bar that Athens must jump over is also higher.

The conditions for the new rescue package resemble an operation for open heart surgery with very coarse cutlery.
There is the danger that other vital organs are injured. Drastic income losses and mass redundancies will reduce the buying power of millions people. The economic situation in Greece will further deteriorate, the economy will further shrink and the impoverishment increase.

This has happened since the first rescue package from 2010 and it will still accelerate with this new rescue package. Under the skilled hands of the experts at the EU, ECB, and the IMF comes the threat of economic collapse and social implosion.

To carry out all the necessary structural reforms requires time and does not fit with the three-month rhythm in which the euro-countries negotiate up to now with Athens about the loan payment. Instead, the Greeks should receive a term of at least a year to initiate the things.